Shenfield Recognized the Need for Sound Economics to Deal with Scarcity

How well I remember Arthur Shenfield (1909-1990), an unforgettable man learned in law and economics and a keen student of a free society. We used to debate privately about who was the greater economist, Mises or Hayek. I chose Mises, he Hayek. I had the good fortune to hear Shenfield lecture, usually without notes, at the Philadelphia Society and the Mont Pelerin Society (where he served a term as president).

And what a lecturer! Those lectures–most are captured in articles reprinted in this insightful book–were impeccable, perceptive, witty, rich in history and philosophy.

Shenfield recognized the stark fact of scarcity and the need for sound economics and the rule of law to cope with it. He saw capitalism as the way to generate widespread social cooperation as well as engage each individual’s pursuit of happiness. No easy trick, but it is done, if hardly infallibly, daily around the globe.

Shenfield thus saw capitalism as a system driven not just by competition but also, again hardly infallibly, by moral principles such as trust, honesty, equal rights, and personal responsibility, including responsibility for charitable acts.

Shenfield was enthralled by Adam Smith’s concept of the invisible hand by which self-interest, under the rule of law, translates into the public interest, which is to say, into rising living standards for the sovereign consumer. As for competition, he found himself at odds with the early Chicago school, especially with the late George Stigler and his long-time embrace of the Sherman Antitrust Act of 1890 as a means of precluding monopoly, collusion, cartels, and predatory pricing. Shenfield confesses that at first he embraced the Sherman Act for its supposed protection of competition, but was won over by the arguments of Mises and Hayek. They led him to conclude that the natural corrective forces of the marketplace are far superior to bureaucratic agencies, such as the Justice Department’s Antitrust Division, which seek to bully competitors into behaving as the regulators think they should. In his excellent treatment of antitrust, Shenfield quotes fellow Mont Pelerin member Henri Lepage of France: “Let us not kill competition in the name of competition.” Certainly Shenfield would have opposed the federal government’s competition-numbing case against Microsoft.

Another important issue Shenfield raises is the so-called “third way” embraced by President Bill Clinton, British Prime Minister Tony Blair, and numerous intellectuals. The third way attempts to meld the best of capitalism with the best of socialism. Shenfield forcefully attacks this perennial delusion. The trouble with the concept of “the best of socialism,” Shenfield argues, is that there is no “best”; it is an illusion, a will-o’-the-wisp that socialists sell to a gullible public with emotional, envy-laden arguments that capitalism is based on selfishness, domination, and income inequality. Socialists foretell disaster if atomistic individualism is allowed free play without the cement of “social justice” to hold society together and if private property, especially “undemocratic” ownership of the tools of production, is not controlled by the state.

Shenfield and his wife (Dame Barbara Shenfield) spent much time in Sweden investigating the truth about the third way. His findings are reported in these pages. He maintains that the ruling Swedish intelligentsia is guilty of what Hayek called “the fatal conceit” for its encouragement of a virtually complete welfare state.

Not only was the third way economically ruinous, but Shenfield also indicted welfarism for inducing social breakdown. He cites approvingly Nobel economist Gunnar Myrdal’s surprisingly honest description of his countrymen as reduced by welfarism to “hustlers and criminals.” Crime rates for robbery, burglary, prostitution, street violence, car theft, drug trafficking, public drunkenness, and welfare fraud are on the rise. Suicide has also increased, most notably among younger people bored with life in the welfare paradise. Concludes Arthur Shenfield: “The true cause of Sweden’s failure is socialism itself.”

There is far more wisdom on a broad array of subjects to be found in this book than a review can possibly do justice to. Shenfield’s writings will prove to be worthwhile reading for anyone who is a friend of liberty.

William Peterson is an adjunct scholar at the Heritage Foundation in Washington and Distinguished Lundy Professor Emeritus in Business Philosophy at Campbell University in North Carolina.

THE FREEMAN

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December 2014

Unfortunately, educating people about phenomena that are counterintuitive, not-so-easy to remember, and suggest our individual lack of human control (for starters) can seem like an uphill battle in the war of ideas. So we sally forth into a kind of wilderness, an economic fairyland. We are myth busters in a world where people crave myths more than reality. Why do they so readily embrace untruth? Primarily because the immediate costs of doing so are so low and the psychic benefits are so high.